An anonymous donation made to a fund in 1928 to inspire the government to pay off the UK's debt is now worth £350 million - but cannot be touched due to a specification made by the donor at the time.

The National Fund, set up 85 years ago and now managed by Barclays, has grown to become one of the largest charities in the UK by net assets.

But the donor specified that the fund should be held in trust until the country raises enough money to pay off the whole debt, which currently stands at £1.2 trillion - substantially more than the £350 million the fund is worth today.

Barclays has been trying for four years to get permission to use the money to make charitable grants or to turn it over to the Treasury, but any change would have to be approved by a court.

"We've been working ever since we became the trustee to change the original objects, which say the funds can be used only to pay off the entire national debt.

"We are working with the Charity Commission and the attorney general's office to look at how best to take the fund forward," Barclays said.

A spokesman for the attorney general's office said: "There has been correspondence between the Charity Commission, the trustees and ourselves over the National Fund.

"We are looking at a number of options for the future of the Fund, consistent with its object of extinguishing or reducing the national debt.

"It would not be right to comment further whilst this process continues."

A spokeswoman for the Charity Commission said is it continuing dialogue with the trustee and the attorney general's office regarding the charity.

This week, the Tories and Liberal Democrats gave up a £520,000 bequest from a former nurse amid confusion over whether she actually meant the money to go to the government.

David Cameron said the wording of Joan Edwards' will made clear that her intention was for the money to ''benefit the nation'' rather than political parties.

The legacy, disclosed along with other donations, sparked a bizarre row after a copy of the document emerged.

Conservative and Lib Dem officials previously briefed that they had split the money because it was earmarked for ''whichever party was in government''.

But the text obtained by the Daily Mail showed Miss Edwards - who died in September aged 90 - identified the beneficiary as ''whichever government is in office at the date of my death''.

As the backlash gathered pace, both coalition partners declared they would hand the funds to the Treasury as a gesture of good faith.